Oil futures dropped today amid expectations that oil supply from Libya could increase; however, prices were supported by the growing tension between the West and Russia over Ukraine.

Brent crude slipped by 16 cents to $107.30 a barrel, while US oil was down by 25 cents to $103.15, reported Reuters.

Crude prices dropped as Libyan state-run National Oil Corp. (Noc) lifted force majeure on the Hariga terminal, which can load 110,000 barrels of crude a day and cover 8.5% of the country’s daily export capacity of 1.3 million barrels.

Libyan Oil Ministry Measurement director Ibrahim Al Awami said that NOC is also considering lifting Force Majeure on the Zueitina terminal and federalists have continued blocking the country’s two biggest ports, Es Sider and Ras Lanuf, as well as Libya’s largest oil refinery.

Oil prices were also under pressure, after the Organization of the Petroleum Exporting Countries (OPEC) forecasted that the demand for its crude oil in 2014 would be low and ended a run of upward revisions to global consumption growth.

The OPEC revealed that demand for its crude oil in 2014 would average 29.65 million barrels per day (bpd), down 50,000bpd from the previous estimate.

Data from the US Energy Information Administration (EIA) and the American Petroleum Institute also revealed that the country’s oil inventories rose on the back of a local production boom, highlighting concerns of oversupply.

On Thursday, Russian President Vladimir Putin warned that the gas supplies to Europe will be cut if Moscow disrupts the flow to Ukraine over unpaid bills, drawing a US accusation that it is using energy as a tool of coercion.

The US also warned that any oil-for-goods deal Moscow might strike with Iran could run afoul of the US sanctions.

Image: OPEC’s crude oil output in March dropped close to this year’s lowered global requirement. Photo: courtesy of Victor Habbick.